“The goodwill impairment was triggered in response to the difference between market capitalization and book value, continued softness in the U.S. linear advertising market, and uncertainty related to affiliate and sports rights renewals, including the NBA,” the company said.
WBD also reported another $2.1 billion of “pre-tax acquisition-related amortization of intangibles, content fair value step-up, and restructuring expenses” but didn’t elaborate.
It’s a complicated moment for WBD with the stock down about 70% from the merger and investors calling for action like breaking the company up again, which is immensely complicated. The company may be considering asset sales, including of its games business, according to the FT.
Shares are down about 6.5% after the close as mostly of the numbers fell short of Wall Street forecasts.
Zaslav and executives are hosting a call today at 4:30 ET.
The write-downs were the biggest news in the second quarter earnings report, which — on the plus side — saw a nice bump in streaming ad revenue and subscribers as Max rolled out its ad-light tier, and expanded in Latin America. The streamer ended June with 103+ million subs, adding 3.6 million. Streaming ad revenue surged by nearly 100%.
However, total DTC sales fell 6% and losses widened to $107 million from $3 million in the 2023 quarter.
Studios faced tough comps from last year, not on the film slate but in games as 2023 was buoyed by a wildly popular Hogwarts Legacy. Theatrical revenue increased rose 19% (excluding foreign exchange) primarily due to higher home entertainment revenue from Dune: Part Two, and higher box office carryover from Godzilla x Kong: The New Empire, released at the end of March.
Studio profit fell 24%.
Networks revenue and profit both fell 8% to, respectively, $5.2 billion and nearly $2 billion.
Distribution revenue fell 8% primarily driven by a 9% decrease in domestic linear pay-TV subscribers. Advertising revenue decreased 9% ex-FX, primarily driven by domestic networks audience declines of 13% and the soft advertising market in the U.S.
Content revenue rose 5% primarily driven by the timing of third-party licensing deals.
Total WBD revenue of $9.7 billion was down 6%.
“In light of industry headwinds, we have and will continue taking bold steps, like reimagining our existing linear partnerships and pursuing new bundling opportunities, with the goal to get Max on the devices of more consumers faster and at a fraction of the acquisition cost, and we are seeing clear evidence that these and other actions we are taking will help drive segment profitability in the second half of the year and into 2025 and beyond.”
